Erie refinancing water, wastewater debt to save town funds

Move should save $1.9 million in interest

Anticipated growth has been largely responsible for Erie's debt, the highest among the east Boulder County communities, which also include Lafayette, Louisville and Superior.

In a series of decisions made by former trustees in an effort to grow the population, the town accumulated roughly $100 million in bonded debt between 2004 and 2010.

The bulk of that debt is sunk into water and wastewater infrastructure and treatment facilities, taken on in installments over the past 11 years, a period that also has seen Erie leaders repeatedly commit to residential development.

Now, the town is trying to cut down on that margin.

During Tuesday's Board of Trustees meeting, council members approved an ordinance authorizing the issuance and sale of the town's wastewater enterprise revenue refunding bonds in the approximate amount of $17.8 million.

Erie is refunding certain Wastewater Revenue Bonds, issued to finance the construction of the North Water Reclamation Facility in order to reduce the interest costs of its revenue bonds.

The refinancing is projected to save the town roughly $1.9 million in interest costs over the life of the bonds, a savings of approximately 6 percent. Furthermore, annual debt service savings are projected to range from $119,000 to $226,000.

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"This refunding represents the most recent example of the town's prudent approach to managing our finances and saving Erie taxpayers' money, said town spokesman Fred Diehl. "Plain and simple."

By the end of 2005, when the town re-drafted its comprehensive plan, Erie had a population of about 12,000.

"Since April of 2014, the town has refunded portions of our water debt to achieve better interest rates and save residents money," Diehl said. "In October of 2015, the town refinanced Water Enterprise Revenue Refunding Bonds, issued originally in 2007. Due to strong demand and market conditions, actual savings over the life of the bonds will be $1.6 million; 27 percent more in savings than we originally projected."

The majority of debt in the town of about 22,000 is related to water and wastewater projects needed to accommodate a projected build-out population of 65,526 by 2055, according to the town's 2005 Comprehensive Plan.

"Town boards embarked on a program to plan for, then encourage, then accommodate all that growth," Krieger said last year. "Our specific challenge now is to manage our resources and services and retire our debt, which we're doing. Second, we need to diversify our revenue base."

The town might be growing at a slower pace than anticipated by previous officials, but Erie's population still jumped 79 percent from 2000 to 2014, according to the U.S. Census Bureau.

In anticipation of the population boom, Erie acquired about $76.4 million in debt for water-related bonds — about 78 percent of the town's total debt.

Despite concerns early on about Erie's debt, officials have said the town's finances were strong following the trustees' review of the 2016 budget proposal.

"These factors contribute to why three times in the last year and a half we have seen the town's overall credit rating improve," Diehl said.

"The fact is that the town is rather effectively servicing our debt and three times in the last year Moody's and S&P increased our credit rating," he said. "They've done so in recognition of our efforts to manage our finances and as an indication that the town's financial outlook is strong."

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